JPMorgan Asks Who'll Provide Market Liquidity as Review End Near
- Banks may have to hold far more capital for Treasuries, JGBs
- Basel Committee intends to finalize rules by year-end
This article is for subscribers only.
Bond market liquidity may shrink if rule changes as proposed requiring banks to hold more capital to offset losses in their trading books are implemented, according to JPMorgan Chase & Co.
Global regulators are finalizing tougher guidelines after the financial crisis revealed that buffers against trading losses were insufficient. The changes may require banks to set aside 60 percent more capital for U.S. Treasury holdings and 90 percent more for Japanese government bonds, said Vanessa Le Lesle, head of regulatory affairs in the Asia-Pacific region for JPMorgan.